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Tax sites gear up for last-minute rush

The IRS and major online tax preparation sites report an increase in online filing as next week's tax deadline approaches.

Tax preparation sites were hoping for a lighter-than-usual last-minute crush starting this weekend, as the calendar and the lure of bigger refunds prompted more taxpayers to think ahead of the April 15 deadline.

Both major online tax preparation services--H&R Block and software maker Intuit's TurboTax--reported sizable year-over-year increases in traffic through March, and the Internal Revenue Service recorded a boost in electronic filing of returns.

As of March 26, 45.8 million returns had been filed electronically, 12 percent more than at this time last year, according to IRS reports. The agency has been steadily pushing taxpayers to file electronically to improve efficiency and cut costs.

The filing season typically takes off during the first few weeks in February, when workers receive their W-2 forms from their employers, said Intuit spokesman Scott Gulbransen. This year's initial bang was bigger than usual, he said, thanks to tax law changes that bulked up refunds for many filers.

"We did see solid growth early in the season," Gulbransen said. "I think that is motivated by the fact the refunds have gone up somewhat with the tax cuts. Over 75 percent of taxpayers are due a refund. That's a good motivator for people to file early."

Gulbransen said that as of March 20, Intuit, which leads the market for both online tax services and boxed tax preparation software, had filed 2 million paid returns through its online services. That's an increase of 18 percent compared with the same time a year ago. The site also filed an additional 560,000 free returns submitted through the Free File Alliance, an IRS-endorsed program that provides free services to low-income taxpayers.

Intuit sold 4.1 million copies of its TurboTax software in the same period, an increase of 13 percent from a year ago, when Intuit was scrambling to quell customer complaints over controversial "product activation" antipiracy technology added to the software. Intuit apologized for the experiment and removed the technology from this year's products.

Gulbransen said there was no indication the controversy had affected sales this year. "The biggest thing was taking (product activation) out of the product," he said. "Customers appreciate the fact we listened to them."

H&R Block reported that as of March 15, its digital division, which combines online tax services and boxed software, had processed 2.58 million returns, an increase of 15 percent from a year ago.

H&R Block spokesman Tom Linafelt said growth was particularly strong for H&R Block's premium products, which combine computerized tax preparation with the services of one of the company's tax professionals.

"We think the reason is that tax law changes and increasing tax law complexity are raising questions among do-it-yourselfers," he said. "People with complicated returns want a little more hand-holding now."

Linafelt said H&R Block also experienced a busier-than-usual kick-off of the filing season in February. And he expected the last-minute crunch to be a little lighter this year, thanks to the fact that April 15 falls on a Thursday, which means folks have more time to wrap up their taxes once they get serious about it this weekend.

"We think April 15 falling on a Thursday will be good for us, because it gives us four weekdays of high volume after the weekend," as opposed to two days last year, he said.

And for those who still can't get it together in time, H&R Block offers online filing for extensions. "We expect a huge number of people to use the 10-minute online extension," Linafelt said. "You fill out a simple questionnaire, and we file an extension to the IRS online."